Peugeot's Picat looking for enhanced engineering quality and partnerships but cooling on EVs

Peugeot sees its new 308 as signaling what is to come from the company in terms of design and engineering quality.

At Peugeot, a lot is riding on the strength of the new 308's success.

Although Peugeot has several, Director General Maxime Picat takes a broad view of further technology and inter-business collaboration agreements: "We are always looking for partnerships." The new Peugeot 308 showcases the company's design and engineering vision.

Quality is very much on the mind of Automobiles Peugeot Director General Maxime Picat. Fully aware that it is a much abused word in the automotive industry, he is at pains to define its application within his company: “It is not just about cars but the quality of all our products and services—and about providing full mobility solutions. We also have to be able to adapt to market conditions much more quickly. For example, in China now we have new, younger customers who are still excited about cars, while in Europe it’s all about being connected while you are in the car.”

It is also about distinctive, consumer-driven design expectations, enhanced engineering and manufacturing efficiency, and larger per-unit profit—all of which are “musts” if Peugeot is to tackle its difficult financial situation and improve margins.

The breadth of the company’s challenge is illustrated via “Mu by Peugeot,” a credit card mobility scheme that embraces a veritable raft of design and engineering solutions, allowing customers to access a wide range of products under the overall Peugeot umbrella, spanning not just sports coupes such as the RCZ but pedal cycles, 3.5-t (3.9-ton) vans, child seats, and scooters. All demand the level of quality to which Peugeot aspires.

Its sister company, Citroën, is on a similar course and has managed to enhance its perceived quality via its successful DS range. But Peugeot is not planning a similar solution. Despite sharing technology—including chassis design—it needs to ensure that it is both distinctively different and that the two brands do not compete with each other.

To help achieve this, a substantial R&D spend is a must. The R&D budget of 2012 (last full year) for Peugeot and Citroen was €2 billion or 5.2% of the PSA Group turnover.

This spend supports Peugeot’s increasing focus on widening its markets. “Our internationalization plan is on track; we are selling 45% of our vehicles outside Europe against 25% a year ago.” The former figure underlines the continuing importance of China, a market Picat understands well.

Apart from a year as a scientific intern at the Comissariat à l’Energie Atomique, Picat, 39, has spent his entire career with PSA Peugeot Citroën, joining in 1998. By 2004 he had responsibility for the building of a new assembly plant at the company’s Sochaux factory and in 2007 went to China as Director of the Wuhan production plant, part of Dongfeng Peugeot Citroën Automobiles. He later became Assistant Director General and subsequently Director General of the Chinese operation before moving back to Europe to take up his current role.

Picat knows the product has to be absolutely right for China. “In the past we tried to sell our excellent, small hatchback manual gearbox diesel cars there, hoping buyers would change their minds about European car design. It did not happen. So now we produce sedan, gasoline, and auto gearbox models for the market.”

The new Peugeot 308 represents the direction Peugeot plans to take to achieve its required quality level. “It is one step at a time. We are happy to compete with Volkswagen, but it is competition—not a case of trying to beat the Golf.”

Projected European sales of the theoretically promising 308 are around 150,000 next year, although this figure is expected to burgeon as it enters other markets. However, in 2012, VW sold some 870,000 Golfs globally (30 million sold since 1974 model introduction) and with the success of the latest Mk. VII generation (voted 2013 Car of the Year in Europe) a near certainty, that figure is set to rise for this year. That is why Picat is taking a wholly pragmatic view of the new 308’s position as a worthy competitor but one that has a lot to prove.

He is equally pragmatic about Peugeot’s exposure to pure electric cars. So far, he said, pure EV sales are “lower than our lowest forecast; even if hopes of 5% total global sales by 2020 are realized, that is not a huge market in any scenario.”

However, Peugeot’s confidence in electric hybrid technology remains. The company’s lineup includes the diesel 3008 HYbrid 4 diesel, and PSA Peugeot Citroën is continuing its development of the interesting hybrid-air project (see http://articles.sae.org/11778/). It combines a gasoline engine (a diesel would also be suitable) and the use of compressed air accumulated via energy recovery during a vehicle’s deceleration phase. Potential average CO2 reduction compared with a comparable conventional vehicle would be 30% and possibly 45% in urban use. The project is seen as a building block toward a fuel consumption of 2 L/100 km for a MY2020 production car.

As part of its geographical aims and expansion, Peugeot’s significant partnerships include General Motors, which took a 7% holding in PSA Peugeot Citroën in 2012. It involves sharing development of B- and C-segment vehicles and also joint purchasing of components, together with logistics. Although details have not been confirmed, GM Europe (Opel/Vauxhall) might build PSA Peugeot Citroën models and vice versa. Both GME and PSA plan to shutter plants, so rationalizing manufacturing facilities could benefit each. But there are commercial complexities to overcome before such an agreement could be finalized.

With its wide geographical reach, GM would offer PSA Peugeot Citroën significant economies of scale and purchasing cost benefits. South America is a significant market in which a partnership could potentially benefit both companies.

It is not yet clear what effect the PSA/GM alliance will have on the former’s link (established more than a decade ago) with BMW to develop and build small-capacity gasoline power units. These are used in Peugeot, Citroën, and Mini models.

PSA Peugeot Citroen is also jointly developing and building city cars with Toyota. The partnership is well established, with eight years of production of three-cylinder hatchbacks in the Czech Republic. The cars are badged Toyota Aygo, Citroën C1, and Peugeot 107 and have limited styling and trim variations to provide individual brand identity.

In China, PSA Peugeot Citroën continues a partnership with Dongfeng Motor Co. that stretches back to the early 1990s.

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